Motilal Oswal bets on India's wind sector, recommends buying this stock

Business Standard

2 days ago

India's wind energy sector is entering a critical growth phase, underpinned by a government-led localisation drive, improving manufacturing capabilities, and rising installation momentum. With an installed capacity of 51.6GW against a 2030 target of 100GW, the sector must add nearly 48.4GW over the next five years—supported by a pipeline of 25.5GW under construction and fresh auctions expected to accelerate.
The recent mandate on local content in wind turbine generator (WTG) manufacturing marks a significant policy shift. Domestic vendor capabilities for blades, towers, and gearboxes are robust, while challenges remain for generators and bearings due to raw material dependencies. Industry experts suggest that the move will deter smaller import-reliant entrants, drive scale among incumbents, and gradually reduce pricing pressure through market share consolidation.
Key growth drivers include India's sizeable underutilised manufacturing base—currently operating at only 20–25 per cent of its ~18GW annual WTG capacity—and strong domestic engineering expertise. Nearly 90–95 per cent of manufacturing and services are already indigenised, aligning with global ISO standards. The exemption of certain projects from the Approved List of Models and Manufacturers (Wind) until 2028 and flexibility for new players should help sustain near-term installation activity, with annual additions of 5–6GW seen as achievable.
However, challenges persist. Import reliance for components such as balsa wood, rare earths, and advanced controllers – primarily sourced from China – remains high, with alternate sourcing from Latin America, Australia, and Africa constrained by mining and extraction capacity. Workforce shortages and limited deep-tech R&D further hinder sectoral efficiency gains. Additionally, transmission bottlenecks pose a structural risk, as grid readiness often lags behind generation capacity additions.
Emerging trends include greater OEM adaptability to site-specific needs, advances in turbine hub heights and capacities, and potential backward integration to secure raw material supply chains. State-level initiatives in Gujarat and Madhya Pradesh on transmission planning demonstrate the importance of coordinated infrastructure growth alongside generation expansion.
Over the medium term, India's wind sector offers a compelling investment case. The interplay of localisation incentives, export potential, and rising domestic demand positions the country as a competitive global manufacturing hub. While policy stability and supply chain resilience will be key to sustaining momentum, the structural tailwinds suggest that the sector is on track to deliver steady capacity growth, margin improvement, and enhanced self-reliance through 2030.
Suzlon | Target: 82
Suzlon Energy share price: Suzlon 's outlook remains robust with expected order inflows of ~4GW in FY26, including ~1.5GW from NTPC, taking the potential order book to ~6.5GW by FY26-end. The EPC share is set to rise from ~20 per cent to ~50 per cent over the medium term, improving execution visibility. The Ministry of New and Renewable Energy's local content mandate, effective July 31, 2025, requires domestic sourcing of key turbine components, enhancing Suzlon's competitive position given its integrated manufacturing base.
The gradual phase-out of Inter-State Transmission System (ISTS) waivers should aid smoother project execution. Proactive land acquisition and EPC expansion strengthen readiness for upcoming opportunities. Further, a projected 30–35 day improvement in the cash conversion cycle will bolster balance sheet strength, free cash flow generation, and sustainable RoEs, positioning Suzlon well for medium-term growth.